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◆ Journal of Environmental Management2026-01-01· Monetary economics

The ESG Flow–Return Paradox: Green sentiment boosts inflows but lags in returns

Phoebe Gao, Arif Perdana

原始摘要(英文原文)· Original abstract
We examine how green sentiment affects ESG mutual fund flows and returns using Google Trends data for 107 funds (April 2019-April 2024). We document an ESG investment paradox: in months when green sentiment rises, ESG funds receive larger capital inflows yet record lower contemporaneous returns, creating a flow-performance wedge. Elevated sentiment, however, positively predicts both flows and returns in the following month. This indicates short-term momentum rather than reversal. Log-linear panel regressions reveal a "values-salience channel" where attention-driven demand creates crowding and execution frictions. Geographic effects are keyword-specific: The United States (U.S.) funds show similar flow responses to "ESG" and "Sustainability" sentiment as European funds, but experience significantly larger return declines when "Green" and "Climate" keywords trend, consistent with politicized climate discourse in U.S. markets. These findings reveal that sentiment timing matters, keyword framing shapes cross-market dynamics, and values-driven attention creates implementation challenges for fund managers.
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The ESG Flow–Return Paradox: Green sentiment boosts inflows but lags in returns — 科研速览 Science Skim